The fund manager Standard Life, which holds 63.6m shares in Xstrata, or 1.92%, issued a statement insisting it will oppose the deal on the terms proposed by the mining group's chief executive, Mick Davis, and Glencore.

David Cumming, head of equities at Standard Life, said: "Although we see some merit in the merger of Xstrata and Glencore, the proposed exchange ratio clearly undervalues Xstrata's assets and future earnings contribution.

"Consequently, it is our intention to vote against the deal unless the merger terms for Xstrata shareholders are materially improved."

Schroders also said it would vote against the deal as it was currently "not compelling". Richard Buxton, head of equities at Schroders, said: "This is not acceptable. It is not compelling or attractive for Xstrata shareholders and we will vote against. If they keep describing it as a merger of equals, why don't Xstrata shareholders get 50%? We continue to think Xstrata's assets and growth profile are superior to Glencore. We had an opportunity to purchase Glencore shares at flotation and chose not to. That was the right decision."

The proposed share-based deal would offer Xstrata shareholders 2.8 new shares in Glencore. Despite being described as a "merger of equals", the deal values Xstrata at £39.1bn, a premium of almost 28% to its average price for the three months before the bidapproach.

The combination to create the fourth largest global resources group was long anticipated even before Glencore joined Xstrata on the London stock market last year. The mining group is already 34% owned by Glencore and the two firms' have headquarters in Switzerland just a few miles apart. Both have been shaped by deal-hungry chief executives – Davis at Xstrata and Ivan Glasenberg at Glencore – who were friends at university in South Africa.

However, the move by Standard Life and Schroders underlines determination among institutional investors not to allow too cosy a deal. Under current proposals, the merger would only go ahead if it received 75% approval among Xstrata shareholders excluding Glencore. That means rebel shareholders would have to speak for only 16.5% of shares in the mining group to derail the merger.

The two groups confirmed that the enlarged business, to be called Glencore Xstrata International, would be led by Davis with Glasenberg as his "deputy CEO and president". Similarly, the finance director's role would go to Xstrata's Trevor Reid, while Glencore's finance director Steven Kalmin is to serve as deputy.

Despite apparently taking the lesser executive roles, the Glencore team will remain a powerful force on the share register. The top 12 executives currently control almost a third of the commodity trading company.

There has already been some speculation about how relaxed Glasenberg would be about ceding control to Davis. Both are frequently described as "big egos". In an uncharacteristically deferential statement, the Glencore boss said: "I look forward to supporting Mick and working as part of what I am confident will be the leading team in the resources sector."

He added: "I have worked with Mick for 10 years and Mick has been running a public company for 10 years – longer than I have."

Overseeing what is likely to be a crowded and opinionated board will be Xstrata's existing chairman Sir John Bond, one of the FTSE 100's most experienced boardroom heads after having served as chairman of Vodafone and HSBC.

Davis said the planned combination was "the logical next step for two complementary businesses", while Glasenberg said it created "a new powerhouse in the global commodities industry".

Davis said the opinions of the two critical shareholders were not representative of the majority. "The silent majority find it intriguing and appealing," he said.

Despite being listed in London, where it will be one of the 10 largest businesses quoted on the stock market, the enlarged company, as with its predecessors, will have very little presence in Britain. It will continue under Glencore's corporate structure, which is to be headquartered in Switzerland and incorporated in Jersey for tax reasons.

Davis said: "Sources of supply are diverging from traditional mining regions to more complex and disparate locations, with a range of new industry participants seeking access to markets. At the same time, demand growth has shifted from Europe, Japan and the US, to emerging Asian economies. The commodities value chain is becoming longer and more complex, creating opportunities for a company that can pre-emptively participate at every stage."